On the Downs–Thomson Paradox in a Self-Financing Two-Tier Queuing System
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 315-322 |
| Journal / Publication | Manufacturing and Service Operations Management |
| Volume | 16 |
| Issue number | 2 |
| Online published | 28 Mar 2014 |
| Publication status | Published - Mar 2014 |
| Externally published | Yes |
Link(s)
Abstract
We model a two-tier queuing system with free and toll service options as two parallel M/M/1 servers. We solve for the welfare-maximizing toll service capacity and toll subject to the constraint that the toll service cover its costs. If the free and toll services are both used in equilibrium, a larger free-service capacity implies longer expected waiting time for the free service and lower welfare: an analogue to the Downs-Thomson paradox in transportation economics. The paradox is caused by the presence of scale economies in the toll service combined with the requirement that it be self-financing. © 2014 INFORMS.
Research Area(s)
- Downs-Thomson paradox, Equilibrium arrival rates, Pricing and capacity decisions, Queuing system, Two-tier service system
Citation Format(s)
On the Downs–Thomson Paradox in a Self-Financing Two-Tier Queuing System. / Guo, Pengfei; Lindsey, Robin; Zhang, Zhe George.
In: Manufacturing and Service Operations Management, Vol. 16, No. 2, 03.2014, p. 315-322.Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
